Harlequin Property accountants appeal US$11.6m judgment

The UK accountancy firm which a High Court judge last month ordered to pay US$11.6m (£9.14m) to Harlequin Property SVG, the problem-plagued holiday resort developer, has filed an appeal against the judgment.

The accountancy, Wilkins Kennedy, said in a statement that, based on discussions with its legal team, it believed “there is justification for an appeal”, noting that the court had “rejected all liabilities apart from one”.

“We have therefore applied to the court for permission to appeal against the judgment on a number of grounds.”

As reported, in December High Court Justice Peter Coulson rejected five of six claims Harlequin had lodged against Wilkins Kennedy last year, but found in favour of the developer with respect to one of the claims, which had to do with an over-payment of a construction company called ICE Group, and ordered the firm to pay Harlequin the US$11.6m.

However, Justice Coulson said the money should not be paid directly to Harlequin, “at least at this stage”, pending the resolution of other matters, including “in particular” the needs of the company’s investors.

Harlequin reiterates its case

In a statement in response to Justice Coulson’s ruling, Harlequin reiterated its position that Wilkins Kennedy had a case to answer with respect to its handling of Harlequin’s affairs, and noted that the accountancy’s first application for permission to appeal had been rejected by Justice Coulson last month, “on the basis that he believes Wilkins Kennedy have no real prospect of success”.

“Harlequin understands that this second and last opportunity for Wilkins Kennedy to apply for permission to appeal will be resolved by 27th January,” a Harlequin spokesman added.

“To be clear, [while] Justice Coulson found that loss flowed from one of the allegations, his judgment also found that Wilkins Kennedy were in breach of contract/breach of duty for failing to give necessary advice on a major contract; there were no effective Chinese walls in place; Wilkins Kennedy were in conflict of interest; and Wilkins Kennedy breached their confidentiality obligations to Harlequin.”

US$60m claim

Harlequin had been seeking US$60m in its claim against Wilkins Kennedy, in connection with the construction of a resort in Buccament Bay, in St Vincent and the Grenadines in the Caribbean.

In his 183-page judgment last month, Justice observed early on that the case did not “lack startling features”, including an ongoing Serious Fraud Office investigation into Harlequin, “significant findings of fraud and dishonesty against [Padraig] O’Halloran” – one of the contractors retained to build one of the Harlequin resorts – and “defamation proceedings”, ultimately resolved “by an apology and a payment of money” to a Harlequin director and his wife.

He then went on to detail precisely why he agreed that Harlequin had a case in its claims against Wilkins Kennedy on the matter having to do with one point, for failing to advise Harlequin to enter into a contract with ICE Group, but said he otherwise rejected “every other claim for loss or damage”.

“The exception is my finding that if Mr MacDonald [Martin MacDonald, a partner in Wilkins Kennedy] had given proper advice as to the necessity of a contractually-binding, straightforward valuation process, the agreement between Harlequin and ICE would have incorporated such a process and would have ensured that ICE were only paid a reasonable amount for the work that that they did, in accordance with their rates.”

In his judgment, Justice Coulson said that the US$11.6m shouldn’t be paid directly to Harlequin, “at least at this stage”, pending the resolution of other matters, including “in particular” the needs of the company’s investors.

Founded in 2005

Harlequin was founded in 2005 to develop resorts in the Caribbean, and was heavily marketed to investors by UK advisers. One published estimate put the number of such “mainly UK pension investors” as around 6,000.

The company is based in the Southeast England town of Basildon, and in its early days it was promoted by such celebrities as former Wimbledon champion Pat Cash, golf legend Gary Player, and footballer Andy Townsend. It filed for voluntary administration in 2013.

According to Caribbean 360.com, David Ames, the founder and director of Harlequin, has said Buccament Bay Resort “could be back up and running in the Spring of 2017”. No details as to how this might be possible were given.